Which economy performed best in 2024?

Who shone in 2024? Check out the countries that overcame global challenges and reached the top of the financial podium

Interest rates at the highest levels in decades, wars in Europe and the Middle East, elections in such important countries as America and India. No matter The world economy delivered another strong performance in 2024; according to the IMF, global GDP will increase by 3.2%. Inflation has declined and job growth remains solid. Stock markets rose more than 20% for the second year in a row.

However, as always, the optimistic global picture hides large variations between countries. To assess these differences, we compiled data on five economic and financial indicators – GDP, stock market performance, underlying inflation, unemployment and government deficits – for 37 mostly rich countries. We then ranked each economy based on its performance on these measures to create a combined score. The table below shows these classifications. Who are the winners?

The Mediterranean’s recovery continues for the third year in a row, with Spain topping this year’s list. Greece and Italy, once emblematic of the euro zone’s problems, continue their strong recoveries. Ireland, which has attracted many technology companies, and Denmark, home of Novo Nordisk, famous for Ozempic, complete the top five. Meanwhile, Northern Europe’s heavyweights disappoint, with underwhelming performances from Britain and Germany. The Baltic duo made up of Latvia and Estonia is again in last place, a position they will also occupy in 2022.

Our first indicator is real GDP growth, widely considered to be the most reliable measure of the overall health of an economy. This year, global GDP was boosted by the resilient American economy and its big-spending consumers. Israel emerged as another standout performer, according to OECD data, although its strong growth largely reflects a recovery from a sharp contraction in the final quarter of 2023, when it began its fight with Hamas. In Spain, annual GDP growth is on track to exceed 3%, driven by a strong labor market and high levels of immigration, which automatically increases economic production. Although the country’s GDP per capita also increased, the increase was less than that of global GDP.

Elsewhere, growth has been dismal. Germany and Italy were hurt by high energy prices and slow manufacturing industries. Japan is expected to record weak growth of 0.2%, pressured by weaker tourism and a struggling automobile industry. Hungary and Latvia entered recession.

Our second measure is stock market returns. Investors ignored a troubled August, when the unfolding yen carry trade raised fears of a crisis. American stocks delivered impressive inflation-adjusted returns of 24% as already lofty tech company valuations rose even higher. Canada’s market, closely linked to its southern neighbor, also posted healthy gains, supported by strong performances in the energy and banking sectors. Japan’s Nikkei 225 reached an all-time high, although its overall annual performance was average. There were some losers. Stock prices in Finland are in negative territory in real terms, and South Korea’s stock market crashed following a coup attempt by the president on December 3.

We then turn to underlying inflation, which strips out volatile components like energy and food to indicate underlying price pressures. Although global inflation has fallen significantly, prices for services remain persistently high in many countries. In Britain, wage growth continues to push up service costs, meaning underlying inflation is uncomfortably high. Germany faces similar pressures. In Australia, rising housing costs are one of the culprits. By contrast, France and Switzerland managed to keep price pressures under control, with underlying inflation rates comfortably below 2%.

A classic marker of economic misery is rising unemployment, which is what many predicted when central banks started raising interest rates (and artificial intelligence became more sophisticated). However, despite some easing, labor markets remain surprisingly robust, with unemployment rates near historic lows. Southern Europe, which still suffers from high unemployment, has seen a notable improvement: unemployment in Greece, Italy and Spain fell to the lowest level in more than a decade. Italy has seen the most progress, with unemployment falling 1.4 percentage points since the start of the year. In America and Canada, where unemployment has increased slightly, the trend is largely attributable to the fact that people are returning to the workforce and high levels of immigration.

Our final measure looks at fiscal balances, excluding interest payments, as a percentage of GDP. After years of big spending, consolidation is needed in many countries to ensure debt burdens remain manageable. Denmark and Portugal stand out for achieving rare budget surpluses through fiscal discipline. Norway and Ireland also have surpluses, albeit for other reasons: Norway is due to oil revenues and Ireland to a windfall from corporate taxes, bolstered by a multimillion-dollar back tax payment from tech giant Apple. .

Most governments, however, continue to spend with abandon. Poland’s primary deficit exceeded 3% of GDP, due to an increase in defense spending in response to Russia’s war in Ukraine. In Japan, a strong fiscal stimulus, aimed at supporting the economy and easing cost-of-living pressures, risks worsening debt problems as an era of ultra-low interest rates comes to an end. The trajectory of British debt is deteriorating; his last budget failed to repair public finances. France is mired in political turmoil and unable to contain spending.

As 2025 approaches, the global economy faces new challenges. Nearly half of the world’s population lives in countries that held elections this year, many of which gave rise to leaders who could be described as “unpredictable.” Trade is under threat, public debt is rising and stock markets have little room for error. For now, at least, Spain, Greece and Italy – long overlooked by their northern neighbors – can enjoy their economic resurgence. They deserve a party.

With information from The Economist*